American Eagle Energy Prices $175M Senior Notes Due 2019 - Analyst Blog

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Denver, CO-based American Eagle Energy Corp. ( AMZG ) has announced the pricing of its $175 million aggregate principal amount of 11% senior notes due 2019 at a price of 99.059% of par. The closing of the offering is expected to occur on Aug 27, 2014, subject to certain customary conditions. Further, the company is looking to establish a senior secured revolving credit facility with a maximum borrowing capacity of $60 million, either in conjunction with the notes offering or soon after.

The energy explorer plans to use the net proceeds from this offering to refinance its current credit facility, to pay fees and expenses related to the offering and the credit facility, plus general corporate purposes.

American Eagle Energy is an independent exploration and production company engaged in the acquisition, finding and development of oil and gas properties. The company's operations are concentrated primarily in the high return Williston Basin, consisting of the Bakken and Three Forks formations in North Dakota and Montana. In particular, American Eagle Energy has done a stellar job at raising production and adding acreage, led by a high quality and experienced management team.

However, as is the case with other independent exploration and production companies, American Eagle Energy's results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces. Realized prices could differ significantly from our estimates, thereby affecting the company's revenues, earnings and cash flow.

As a result, American Eagle Energy currently retains a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.

However, some better-ranked domestic upstream energy stocks include RSP Permian Inc. ( RSPP ), Cheniere Energy Inc. ( LNG ) and Clayton Williams Energy Inc. ( CWEI ). All the firms hold a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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